GOP govs want Medicaid block grants

Republican governors have come to Washington with a loud and clear message on Medicaid: It’s time for more flexibility in how federal dollars in the state-administered entitlement program are spent.

GOP Govs. Haley Barbour of Mississippi and Gary Herbert of Utah are likely to push for block grants for Medicaid on Tuesday when they testify before the House Energy and Commerce Committee.

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“We’re tired of having to come up to Washington to beg for waivers or even state plan amendments,” Barbour told reporters. “We want flexibility. For myself, I would take a capped block grant in return for true flexibility to run the program in the best way.”

Republicans coalesced around Medicaid block grants — capped funding that states control — as the best path forward during a National Governors Association meeting Sunday.

“We want to have a great safety net in our state,” Florida Gov. Rick Scott said in an interview with POLITICO. “I know that I can spend the money better to cover people better.”

When President Barack Obama was asked about the proposal Monday during a closed question-and-answer session with governors, a senior administration official who was present said he remarked that “while we need to find a more sustainable path to Medicaid,” he is concerned “that a block grant would make children vulnerable.”

The president asked governors to form a bipartisan group to work with Health and Human Services Secretary Kathleen Sebelius on ideas to reduce Medicaid costs while covering the same number of people. During the Q & A, Obama signaled that savings could be found by better managing the 5 percent of beneficiaries who account for 50 percent of the program’s costs.

The idea of Medicaid block grants dates back to the Clinton-era welfare reform fight. Under former House Speaker Newt Gingrich’s original proposal, both the welfare program and Medicaid would have been converted to block grants. Former President Bill Clinton twice vetoed the package before reaching a compromise with Republican leaders under which only welfare was converted.

Funding has not increased for the welfare program that emerged, Temporary Assistance for Needy Families, since the law passed in 1996, which effectively cut the program by 30 percent over 15 years.

Now, Republican governors are pushing block grants as a means to gain more control over their increasingly stressed Medicaid budgets. States’ expenditures for the program are expected to grow by 9.4 percent annually between 2010 and 2019, according to a new analysis of Medicaid actuary data by the American Action Forum.

“In pursuing block grants, governors should be negotiating on all fronts — eligibility, maintenance of effort — all these things that are being dictated by the [Patient Protection and] Affordable Care Act,” Douglas Holtz-Eakin, American Action Forum president and former Congressional Budget Office director, told POLITICO in an interview. “The block grants have always been viewed as a vehicle to trade open-ended money for flexibility, and I think governors will take that.”